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Retail sales of multicultural produce on the rise

(March 27, Asian/Latin Produce Marketing Profile) Asian and Hispanic communities have grown steadily in the U.S. and the numbers keep rising. Members of the produce industry think this trend presents excellent opportunities for retailers and the foodservice industry to market specialty foods, catering not only to minorities but to consumers in general.

Nevertheless, there are those who think they could make much more headway with this marketing angle.

“When we first started the business, we would only sell to niche markets and not the mainstream,” said Robert Schueller, public relations director for Los Angeles-based World Variety Produce Inc., which markets under the Melissa’s label.

“The numbers in the demographics for the U.S. 2010 census will tell huge differences, and many people are underestimating this melting pot of cultures living in the U.S. The Hispanic demography will be the majority of all minorities,” he said.

According to “Hispanics, Asians and Fresh Produce,” a 2006 study compiled by the Produce Marketing Association, Newark, Del., with 2004 statistics from the U.S. Census Bureau, the Hispanic population should reach 110 million people by the year 2050.

The study showed that 68% of the U.S. Hispanic population is Mexican, representing 9% of the total U.S. purchasing power, said Nancy Tucker, vice president of global business development for PMA.

Not only is the Hispanic population swelling, but Asian communities are expanding rapidly as well, and fresh produce companies are eager to cash in on this market.

PMA public relations director Julia Stewart said the U.S. Asian population grew 49% in the 1990s and 29% from 2000-06.

“Asians spend more on food as a percentage of their income than any other racial group. They spend more on produce, dollar-wise, than Hispanics, because produce is more stable on their diets,” Stewart said.

About half of Asian Americans live in California, New York and Texas, Stewart said.

“There are 20 distinct Asian groups living in the U.S., but only the top six groups, which are Indian, Chinese, Filipino, Japanese, Korean and Vietnamese, make up 88% of the Asian U.S. population,” she said. “We would be dumb not to pay attention to these groups.”

The demographics show impressive numbers, but the shopping habits of these minorities are just as compelling.

Mike Marino, sales manager for Cimino Brothers Produce, Salinas, Calif., said, “Asians like to shop two or three times a week for their vegetables. They spend a lot of time in the fresh market place.”

Not only is the shopping frequency impressive, but the purchasing power of Asian Americans ranks among the highest in the U.S.

Schueller said the average Asian household income in the U.S. is $55,026 or 28% higher than the national average. And Asian shoppers consume twice as much produce as the average American.

The good news is that while Asians and Hispanics come from parts of the world that are geographically located thousands of miles away from each other, their shopping habits are quite similar to each other.

“When it comes to choosing high-quality produce, the minorities have more in common with each other than with the mainstream market,” said Santiago Ogradón, a Hispanic advertising and marketing consultant in Los Angeles.

According to the PMA 2006 study, relationships between retailers and shoppers are vital to minorities. The use of Spanish and Asian-language signage and circulars is also important. Other elements both cultures have in common: The way fruits and vegetables are presented greatly influences buying, and price does matter, but not at the expense of quality.

Although these minorities represent many opportunities for retailers, some industry experts think marketing specialty items to minorities and mainstream consumers is sorely lacking.

“Stores located in suburban areas are not catering to the market clientele yet,” Schueller said. “They may carry cilantro, jicama, hot peppers, jalapeños — all essential ingredients — but selection is very limited, and not competitive as far as pricing is concerned.”

Many types of specialty items are mainly found in bodegas — independently owned and operated markets or grocery stores run by Latin Americans or Asian Americans — and not so much in the big retail chains, said Jim Perkins, president of ULATAM Retail Solutions, Chicago.

Perkins, author of “Beyond Bodegas — Developing a Retail Relationship with Hispanic Customers,” said forging a relationship between retailers and Hispanic customers is extremely important. He suggested retailers learn more about their Hispanic customers’ cultural values and what shoppers expect from retailers in order to add ch-ching to their cash registers.

“Mainstream markets believe that the background is not important and that their messages are explicit. The word that is being conveyed contains the majority of the information, and this is not true,” Perkins said.

“First-time generations and recent arrivals need to feel that the store portrays a friendly environment and that someone is going to help them,” he said. “This is extremely important if retailers want to retain them.”

Ogradón said not all retailers do their homework.

“They need to study Hispanic preferences for their customers and carry those products,” Ogradón said. “By studying the demographics close to their store, they (retailers) can figure out what fruits and vegetables to stock.

“If you are a Cuban, you wouldn’t care about buying jalapeños. Tropical fruits come into play when catering to a Central American clientele,” he said.
But many industry experts said they believe retailers have shown impressive advancement in marketing to minorities.

Karen Caplan, president of Los Alamitos, Calif.-based Frieda’s Inc., is convinced retailers have taken big strides by introducing specialty items to minorities.

“American retailers have made enormous progress studying the demographics and knowing their shoppers, Caplan said.

Despite these efforts, Caplan suggests some points that could attract more shoppers.

“They need to hire employees in the produce department who mirror shoppers in the store,” Caplan said. “If the store is located in a high Korean neighborhood, hire Koreans.”

In areas where there are large populations of minorities, Caplan said retailers should not be afraid of using bilingual signage.

With the growing number of minorities in the U.S., many stores have included special ethnic sections containing many specialty items. Nevertheless, there is still an impression that much more can be achieved.

“A number of chains, like HEB, have developed store divisions (and) carry a lot of Hispanic products,” Tucker said. “Certain chains are doing a great job, but a lot more could be done.”